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Gamekeeper or Poacher? - Big Pharma's Stance on Biosimilars

On Thursday (February 7), Amgen management will discuss the company’s future growth strategies at an eagerly awaited business review day. One particular area of interest – for investors and analysts alike – will be discussion on how Amgen is looking to develop its role in the biosimilars market.

In the space of a few weeks, Amgen has been cited as a major opponent to biosimilar uptake – firstly in an article published in the New York Times and then by the Generic Pharmaceutical Association (GPA) – but has also seen further details concerning its own portfolio of biosimilar developments unveiled by its partner Actavis.

Efforts by Amgen and Roche (also cited in the New York Times article) to introduce bills that would restrict the ability of pharmacists to substitute biosimilars for branded biologic products were described by the GPA as a “pre-emptive strike” to “limit consumer and patient access to safe and effective biosimilars in the future”.

It is clear to see why branded companies are taking this route to limit or ‘control’ the level of biosimilar uptake. Numerous surveys have demonstrated that ‘substitutable’ biosimilars are more likely to be prescribed by physicians.

Furthermore, the rationale for pursuing such measures is clear; recent analysis of the biggest selling pharmaceutical products of all time demonstrated the prominent role of branded biologics and the sustainable revenue streams that these products are likely to deliver post patent expiry.

The real question is to what extent branded companies such as Amgen which are also developing biosimilars want to limit the future role of these products or simply raise the barriers to entry. The FDA has yet to pass judgement on the subject of substitutable or interchangeable biosimilars, but consensus indicates that such a status could be conferred on a biosimilar if it is supported with more extensive clinical testing. Which players are better positioned to deliver such products to the market? – experienced branded biologic manufacturers such as Amgen of course.

The GPA noted in its commentary on the New York Times article that many companies who are developing biosimilar products also manufacture branded biologics. Focusing on Amgen, analysts at Credit Suisse describe the situation more succinctly – “does the company want to be a game keeper or poacher?”

Via its collaboration with Actavis, Amgen’s commitment to biosimilars is clear. Indeed, when the generics manufacturer announced its Q4 results last month it revealed that three of the biosimilar products being developed as part of the collaboration are versions of the cancer treatments Avastin, Herceptin and Rituxan – all of which are manufactured by Roche.

The game keeper/poacher analogy is not only relevant to Amgen of course, but also the numerous Big Pharma players that are developing both biosimilars and branded biologics. On its recent Q4 conference call with analysts Pfizer confirmed the likely progression of its own Herceptin biosimilar program into Phase III clinical trials later this year.

It is also clear to see why the GPA is concerned. As recently noted by Sanford C. Bernstein analyst Ronny Gal, given the proportion of pharmaceutical revenues now generated by biologic products traditional generic drug manufacturers have little choice but to pursue biosimilar development. “Participation is a requirement, not an option” says Gal, however, he concedes that the abundance of competition from credible companies makes for a less compelling risk/reward trade off for participation in the biosimilars market during its “transition years” (2015-20). There is additional risk, nonetheless, that non-participation will see smaller companies left behind.

It is perhaps too simplistic a view to suggest that Big Pharma’s involvement in biosimilars is designed exclusively to curtail the efforts of the generics industry. Some may feel that players such as Amgen are hedging their bets and there could be an element of this at play. Gal argues, however, that the presence of credible players will accelerate the adoption of biosimilars and could drive more rapid price declines in markets with effective payer schemes.

Similarly Amgen’s own biosimilar strategy – unveiled steadily over the past 18 months – has drawn enthusiasm from some analysts. This is a complex market and therefore only those companies with suitable expertise and capabilities will be successful, they argue.

Concurrently, over the past few years the broader view of the biosimilars market has changed. While biosimilar development retains the allure of a ‘must have accessory’ for generic and Big Pharma players alike, the gold rush mentality that has triggered a succession of collaborations in this space has steadily diminished.

How much of this change in attitude towards the commercial value of biosimilars has been driven by a combination of lobbying efforts and Big Pharma’s creeping presence in the development space is open to conjecture.

The reality is that if the biosimilar opportunity fails to deliver the return on investment once projected, the impact will be felt far less on the balance sheets of Big Pharma companies, many of which will continue to derive considerable revenue streams from branded biologic products.

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